Daily Gold Update

Source: Dr. Bill Musgrave, American Gold Exchange

Austin— In a day of volatile trading, gold closed down 0.3% at $1,206 on profit-taking after rising as high as $1,221 early in the session, propelled by momentum from two straight days of gains. After hours, it then quickly jumped $14 back to $1,220 following the release of the minutes from the FOMC's last meeting.

As evident in the minutes, the Fed is increasingly worried about the rising dollar, flat inflation, and economic slowdown in Asia and the Eurozone, all of which have the potential to undermine the U.S. recovery. Traders took the news to mean that the Fed is inclined to keep interest rates lower for longer in order to offset these risks.

Separately, Chicago Fed chief Charles Evans reiterated that unemployment remains too high, even at 5.9%, and the strengthening dollar could damage U.S. exports and prevent inflation from reaching Fed targets.

Stocks surged to session highs after the release of the minutes, with the Dow adding 1.6%, or 275 points, and the S&P 500 picking up1.75%. The dollar fell back against most rivals, pressured by expectations that the Fed may be trending back toward more dovish monetary policies. A falling dollar supports gold and other commodities denominated in it for international trade by making them less expensive to users of other currencies.

The other precious metals tracked gold higher after the Fed minutes. December silver initially fell 1% to close at 17.06 before surging 36 cents, or 2.1%, after hours. October platinum added $17.10, or nearly 1.4%, to $1,278; and December palladium jumped $16.40, more than 2%, to $803.40.